Allscripts plunged before the opening bell Thursday as two top executives departed abruptly.
Glen Tullman will exit as CEO and director. Lee Shapiro will step down as president but serve as a consultant for up to six months. They will be replaced by board member Paul M. Black, a former chief operating officer of Allscripts competitor Cerner Corp.
The Chicago healthcare information technology company said late Wednesday that its board conducted a thorough review of strategic options and concluded that the best path was to develop its "long-term potential" under new management.
Some investors had hoped that the company would put itself up for sale and with that option seemingly set aside, at least for now, many began dumping shares.
"This will be felt as a sting to many investors hoping to get bailed out on a deal," Citi analyst George Hill said.
Hill called Black "an exceedingly capable executive," and he said he was one of a few capable of turning around the struggling company.
"We had been critical of the prior management team's ability to execute, and suspect new management can do a better job of creating value for shareholders with the Allscripts' assets," he wrote.
Sterne Agee analyst Greg T. Bolan said that the executive changes could pave the way for shareholder-friendly actions like a deal to take the company private.
"Rightly or wrongly, investors perceive Mr. Tullman as directly responsible for product development and communication missteps by Allscripts over the years," Bolan wrote.
The company's shares started falling Wednesday in after-hours trading and slid nearly 17 percent, or $1.81, to $8.87 Thursday in premarket trading. Allscripts shares have shed more than 50 percent of their value in 2012.